Oregon Banks, Credit Unions Draw Battle Lines

In the state of Oregon, the battle lines between banks and credit unions have been drawn.

The Northwest Credit Union Association sounded the alarm to its member credit unions earlier this month about what it called three proposed “anti-credit union” bills that aim to tax many credit unions and implement new regulations. According to NWCUA, the Oregon Bankers Association introduced these bills into the state’s legislature.

H.B. 2485 would subject Oregon’s credit unions to rules similar to the U.S. Community Reinvestment Act of 1977 that encourages banks to meet all of the credit needs of the communities they serve, particularly low- and moderate-income communities.

And H.B. 2484 would require credit unions to file periodic reports on the number of member business loans, the services credit unions provide to low- and moderate-income members, and a list of deposits held by credit unions at their main office and locations where they accepts deposits.

“This is about credit unions that have been become pretty indistinguishable from banks,” Linda Wilhelms Navarro, president of the OBA, told The Oregonian. “Tax-exempt organizations have to fulfill a public benefit to justify the subsidy.”

NWCUA counters that credit unions do pay property and payroll taxes, and they are exempt from the state’s occupation tax because as not-for-profit cooperatives, their earnings are retuned to members in the form of lower fees, lower loan rates and higher returns on deposits.

What’s more, the NWCUA commissioned a new survey of 300 registered Oregon voters that shows 90% of Oregonians have a positive impression of credit unions, while 56% have a favorable opinion of banks. In addition, credit unions have a 96% approval rating among their members.

In a similar survey that questioned 300 registered voters in the state of Washington, 88% have a positive impression of credit unions, while 43% have an unfavorable view of banks.

The survey also showed 70% or Oregon voters agree that because credit unions are not-for-profit, they should not have to pay business or occupation taxes. In Washington, 68% of voters also agreed with this position.

The telephone survey, with a margin of error of 5.7%, has been shared with Oregon legislators and the media.

According to NWCUA, Oregon’s tax officials estimate the proposed bills could generate $1 million to $4 million annually. However, CUNA reported Oregon credit unions have helped their members save a total of $121 million in direct benefits during a 12-month period that ended September 2012.

“That’s a $170 a year in real savings for the average credit union household,” said Tony Stang, president/CEO of NWCUA. “That is a benefit bank customers did not enjoy. Our members, teachers, truck drivers, working moms and dads, didn’t pay those banking fees and instead invested their savings right back into Oregon’s economy.”